307 KAR 7:010. Procedures and
standards for certification and approval of eligibility.

RELATES TO: KRS 154.23-070

STATUTORY AUTHORITY: KRS 154.23

NECESSITY, FUNCTION, AND CONFORMITY:
KRS 154.23-070 authorizes the Kentucky Economic Development Finance Authority
to promulgate administrative regulations establishing procedures and standards
for certification of qualified zones, and determination and approval of
eligible companies and their projects. As staff to the authority, the Cabinet
for Economic Development will accept applications and monitor the approved
companies. This administrative regulation establishes the procedures and
standards for: (a) certification of qualified zones; and (b) determination and
approval for eligible companies and their projects.

Section 1. Definitions. (1)
"Activation date" means a date established by an eligible company
that begins the ten (10) year term of the agreement.

(a) The activation date for
manufacturing companies shall be a date within a two (2) year period after
final approval of the financing agreement.

(b) The activation date for service
or technology companies shall be a date within a one (1) year time period after
the date of final approval of the service and technology agreement.

(2) "Approved company" is
defined in KRS 154.23-010(1).

(3) "Approved costs" is
defined in KRS 154.23-010(2).

(4) "Assessment" is defined
in KRS 154.23-010(3).

(5) "Authority" is defined
in KRS 154.23-010(4).

(6) "Commonwealth" is
defined in KRS 154.23-010(5).

(7) "Economic Development
project" or "project" is defined in KRS 154.23(6).

(8) "Eligible company" is
defined in KRS 154.23(7).

(9) "Final approval" is
defined in KRS 154.23(8).

(10) "Financing agreement"
is defined in KRS 154.23(9).

(11) "Inducements" is
defined in KRS 154.23(10).

(12) "Kentucky Economic
Opportunity Zone Act Application for Amendment of a Qualified Zone" means
the application submitted by a county, urban-county government, or city of the
first class to amend the boundary of a qualified zone.

(13) "Kentucky Economic
Opportunity Zone Act Application for Certification of an Economic Opportunity
Zone" means the application submitted by a county, urban-county
government, or city of the first class to request certification of a qualified
zone.

(14) "Kentucky Economic
Opportunity Zone Act Application for Manufacturing Project" means the
application submitted by an eligible manufacturing company seeking inducements
under the Kentucky Economic Opportunity Zone Act, and includes the
"Cabinet for Economic Development Economic Incentive Disclosure
Statement".

(15) "Kentucky Economic
Opportunity Zone Act Application for Service or Technology Project" means
the application submitted by an eligible service or technology company seeking
inducements under the Kentucky Economic Opportunity Zone Act, and includes the
"Cabinet for Economic Development Economic Incentive Disclosure
Statement".

(16) "KRS" means the
Kentucky Revised Statutes, as amended from time to time.

(17) "Local government" is
defined in KRS 154.23-010(11).

(18) "Manufacturing" is
defined in KRS 154.23-010(12).

(19) "Preliminary approval"
is defined in KRS 154.23-010(13).

(20) "Qualified employee"
is defined in KRS 154.23-010(14).

(21) "Qualified statewide
employee" is defined in KRS 154.23-010(15).

(22) "Qualified zone" is
defined in KRS 154.23-010(16).

(23) "Relocation costs" is
defined in KRS 154.23-010(17).

(24) "Rent" is defined in
KRS 154.23-010(18).

(25) "Service and technology
agreement" is defined in KRS 154.23-010(19).

(26) "Service or
technology" is defined in KRS 154.23-010(20).

(27) "Start-up costs" is
defined in KRS 154.23-010(21).

Section 2. Eligibility Requirements
for Qualified Zone. The authority shall certify each zone, in accordance with
KRS 154.23-015, based upon the contents of the Kentucky Economic Opportunity
Zone Act Application for Certification of an Economic Opportunity Zone
submitted by a county, urban-county government, or city of the first class.

Section 3. Eligibility Requirements
for Amendment to Qualified Zone Boundary. The authority may approve amendments
to a qualified zone boundary, in accordance with KRS 154.23-020, based upon the
contents of a Kentucky Economic Opportunity Zone Act Application for Amendment
of a Qualified Zone submitted by a county, urban-county government, or city of
the first class, in which the qualified zone is located.

Section 4. Decertification of
Qualified Zone. The authority shall not give preliminary approval to a project
in a decertified zone.

Section 5. Kentucky Economic
Opportunity Zone Program. (1) Application process for manufacturing companies.
A manufacturing company applying for an inducement under the Kentucky Economic
Opportunity Zone Act shall file a Kentucky Economic Opportunity Zone Act
Application for Manufacturing Projects with the authority. The following
information and materials shall be submitted as part of the application:

(a) A letter from the eligible
company setting forth the history of the business and providing a detailed
description of the manufacturing project to supplement the items contained in
the application. The letter shall include the following:

1. Dollar amount of the company’s
investment in the project;

2. Total number of full-time
employees to be hired as a result of the project, including a statement that
the eligible company shall hire at least ten (10) qualified employees;

3. Written evidence that a
significant number of existing jobs in the Commonwealth will not be lost or
adversely affected due to the proposed project, including:

a. A list of all known competitors to
the project located in Kentucky; and

b. Reasons the proposed project will
not adversely affect existing jobs in the Commonwealth;

4. Statement that the project could
reasonably and efficiently locate outside the qualified zone and, but for the
inducements offered by the authority, the eligible company would likely locate
outside the zone; and

5. If the proposed project is an
expansion, the identity of each qualified statewide employee employed by the
company at the time the application is filed, listed by:

a. Name;

b. Employee identification or Social
Security number;

c. Street address; and

d. Date of hire.

(b) A letter from the appropriate
local elected official, either mayor or county judge executive, endorsing the
project and acknowledging approval of the job
development assessment fee, if applicable.

(c) General information about the
eligible company, including company ownership.

(d) Identification of the eligible
company’s:

1. Attorney;

2. Primary bank;

3. Project lender;

4. Lessor, if applicable; and

5. Accountant.

(e) Itemization of estimated project
costs

(f) Proposed project financing.

(g) A copy of the eligible company’s
financial statement for the most recent fiscal year end.

(h) The current number of jobs at the
proposed project site.

(i) The projected number of new
full-time and part-time jobs to be created at the project by the activation
date.

(j) The projected total number of
full-time and part-time jobs that will exist at the project site on the
activation date.

(k) The number of jobs retained
because of the economic development project.

(l) The number of managerial,
technical, skilled, semiskilled and unskilled jobs, based on the level of
specialized training required to perform the particular job competently, that
will be created by the proposed project with the average hourly wage and
average salary for each job category, as follows:

a. Possesses a certificate or degree
from an accredited vocational-technical school, college or university;

b. Has been licensed independently in
a specific occupation, and shall have a certificate or diploma in the job
category in which he or she is employed; or

c. Has completed an apprenticeship as
a requirement for being certified by a union.

4. A "managerial" job
primarily involves supervising other employees of the company.

5. A "technical" job
requires expertise or knowledge specific to the particular industry of the
eligible company; even if the job also fits another category.

(m) For the ten (10) year term of the
financing agreement, the projected annual:

1. Payroll;

2. Kentucky taxable income; and

3. Kentucky tax liability.

(n) Notice of the following fees to
be paid by the eligible company:

1. A $500 nonrefundable application
fee, due and payable to the authority upon submission of the application;

2. An administrative fee of
one-quarter (1/4) of one (1) percent of the total approved costs, for a minimum
of $1,000, due and payable upon execution of the financing agreement. If
approved costs are finally determined to be greater, the administrative fee
shall be increased accordingly; and

3. The legal fee for preparation of
the financing agreement by the authority’s counsel, payable upon execution of
the financing agreement.

(2) Application process for a service
or technology company. A service or technology company applying for an
inducement under the Kentucky Economic Opportunity Zone Tax Credit Program
shall file a Kentucky Economic Opportunity Zone Act Application for Service or
Technology Projects with the authority. The following information and materials
shall be submitted as part of the application:

(a) A letter from the eligible
company setting forth the history of the business and providing a detailed
description of the service or technology project to supplement the items
contained in the application. The letter shall include the following:

1. Dollar amount of the company’s
investment in the project;

2. Total number of full-time
employees to be hired as a result of the project, including a statement that
the eligible company shall hire at least ten (10) qualified employees;

3. Written evidence that a
significant number of existing jobs in the Commonwealth will not be lost or
adversely affected due to the proposed project, including:

a. A list of all known competitors to
the project located in Kentucky; and

b. Reasons the proposed project will
not adversely affect existing jobs in the Commonwealth;

4. Statement that the project could
reasonably and efficiently locate outside the qualified zone and, but for the
inducements offered by the authority, the eligible company would likely locate
outside the zone; and

5. If the proposed project is an
expansion, the identity of each qualified statewide employee employed by the
company at the time the application is filed, listed by:

a. Name;

b. Employee identification or Social
Security number;

c. Street address; and

d. Date of hire.

(b) A letter from the appropriate
local elected official, either mayor or county judge executive, endorsing the
project and acknowledging approval of the job
development assessment fee, if applicable;

(c) General information about the
eligible company, including company ownership;

(d) Identification of the eligible
company’s:

1. Attorney;

2. Primary bank;

3. Lessor;

4. Project lender, if applicable; and

5. Accountant;

(e) Itemization of estimated project
costs, including:

1. Annual rent of the building or the
fair rental value if the building is being purchased;

2. Projected start-up costs as of the
activation date, including the cost of furnishing and equipping the building
for ordinary business functions, including:

a. Computers;

b. Nonrecurring costs of fixed
telecommunications equipment;

c. Furniture;

d. Office equipment; and

e. Relocation costs.

(f) The current number of jobs at the
project location, both full and part time;

(g) The projected number of new
full-time and part-time jobs to be created at the project by the activation
date;

(h) The total projected number of
full-time and part-time jobs that will exist at the project site on the
activation date;

(i) The number of jobs retained
because of the economic development project;

(j) The number of managerial,
technical, skilled, semiskilled and unskilled jobs, based on the level of
specialized training required to perform the particular job competently, to be
created by the proposed project and the average hourly wage and average salary
for each job category. Job categories are described in subsection (1)(l) of this
section.

(k) For the ten (10) year term of the
service and technology agreement, the projected annual:

1. Payroll;

2. Kentucky taxable income; and

3. Kentucky tax liability.

(l) Whether the proposed project site
will be owned or leased by the eligible company;

(m) Notice of the following fees to
be paid by the eligible company:

1. A $500 nonrefundable application
fee, due and payable to the authority upon submission of the application;

2. An administrative fee of one-tenth
(.1) of one (1) percent of the total approved costs, for a minimum
administrative fee of $1,000, due and payable upon execution of the service and
technology agreement. If approved costs are finally determined to be greater,
the administrative fee shall be increased accordingly; and

3. The legal fee for preparation of
the service and technology agreement by the authority’s counsel, payable upon
execution of the service and technology agreement.

Section 6. Approval Standards. In
accordance with KRS 154-23-030, the authority may, by resolution, approve an
eligible manufacturing or service or technology company after consideration of
the application for the Kentucky Economic Opportunity Zone Tax Credit Program
if the eligible company meets the requirements of the Act and relevant
administrative regulations.

Section 7. Financing
Agreement Contents. The authority may require the following information, as
negotiated terms referenced in KRS 154.23-035(1), to be part of the financing
agreement:

(1) Annual, quarterly or
monthly progress reports to the authority;

(2) Annual, quarterly or
monthly financial reports to the authority;

(3) Annual certifications
of debt service payments made by the eligible company; and

(4) Access to the
approved company’s records.

Section 8. Service and
Technology Agreement Contents. The authority may require the following
information, as negotiated terms referenced in KRS 154.23-040(1), to be part of
the service and technology agreement:

(1) Annual, quarterly or
monthly progress reports to the authority;

(2) Annual, quarterly or
monthly financial reports to the authority;

(3) Annual certifications
of rental payments referred to in KRS 154.23-040(3); and

(4) Access to the approved
company’s records.

Section 9. Incorporation
by Reference. (1) The following documents are incorporated by reference: